Legal battle over Rock Hill property

Alleged lies, schemes about status of land

ROCK HILL — When Cinium Financial Services Corp. wound down its operations in the former Frontier Insurance Building, a couple dozen people lost their jobs, and Robert Berman's dream of resurrecting the insurance industry in Sullivan County crumbled.

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By Jessica DiNapoli

recordonline.com

By Jessica DiNapoli

Posted Apr. 20, 2014 at 2:00 AM

By Jessica DiNapoli
Posted Apr. 20, 2014 at 2:00 AM

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ROCK HILL — When Cinium Financial Services Corp. wound down its operations in the former Frontier Insurance Building, a couple dozen people lost their jobs, and Robert Berman's dream of resurrecting the insurance industry in Sullivan County crumbled.

Now, fallout from internal strife between Berman, Cinium's former CEO, and current CEO Jeff Camp, is threatening another dream of Berman's — his plans to develop 500 acres in Rock Hill, land he spent more than a decade assembling.

Last year, Berman, a serial entrepreneur in Sullivan County, and Joseph Bernstein, his attorney and business partner, floated the idea of a $600 million casino and entertainment center on the land. They've also proposed housing and commercial developments.

Another business partner of Berman's, Sam Eisenberg, worked to raise money and develop interest in an Orthodox Jewish community at the site, according to court papers.

Bernstein is now working with an investment bank to market the property, more valuable because of the prospect of casinos landing nearby.

But the land is tied up by lawsuits Camp filed against Berman in February, claiming Berman lied about the financial status of the property and schemed to have one of his business associates take ownership of a mortgage in order to keep it under his control. Camp, who did not return phone calls or emails, is part owner in the land.

Berman, who lives in New Hope, Pa., according to court papers, declined to comment.

Bernstein, who is named as a defendant in a Camp lawsuit filed in Rockland County, said he is not aware of any relationships between Berman or himself and the new owners of the mortgage. Bernstein and Berman's attorneys filed papers last week seeking to have Camp's lawsuit dismissed.

The land is also in foreclosure. Mount Carmel Equities, the new owner of the $5.8 million mortgage on the property, began an action against Berman's real estate company, Glen Wild Land Co., last month in Sullivan County Supreme Court.

The beef between Berman and Camp stems from a deal Cinium made with Tower Group in 2012, shortly after Berman moved Cinium's headquarters to the Frontier building. Camp started out as a lender to Cinium, and became chief financial officer in 2011.

The deal with Tower, a subsidiary of a multinational insurance company based in Bermuda, gave Cinium the opportunity to dramatically expand its business, part of Berman's goal of rebuilding the insurance industry in Sullivan County. Cinium mostly issues surety bonds, which guarantee that a contractor will complete a project and pay laborers and suppliers.

Cinium was a small startup at the time, and Tower's strong financial rating allowed the company to write policies across the country, according to court papers.

In exchange for the growth potential, Berman gave Tower control over Cinium, including "total blocking and veto rights," Bernstein said in a phone interview. That provision set the foundation for Camp and the board to kick Berman out of the company.

A little more than a year after the original deal was inked, Berman discovered Tower's financials weren't what they seemed, according to a lawsuit Cinium filed in October against Tower, Camp and members of Cinium's board of directors in state Supreme Court in Monticello.

Tower's parent company posted more than $500 million in losses in the second quarter of 2013, mainly because it had to set aside about $327 million for loss reserves for policies it had written.

A similar issue led to Frontier's downfall more than a decade ago.

Tower's financial rating suffered because of the losses, and the financial troubles "devastated" Cinium's business, according to the lawsuit.

Berman claims that Camp has a side agreement with Tower, because he sold the company $3 million worth of Cinium stock he owned for only $100 in August. The side agreement is a breach of fiduciary duty to Cinium, according to the lawsuit.

Camp claims in court papers the low price reflected what he sees as the value of Cinium.

Berman also claims that some of Cinium's board members, who had affiliations with Tower, knew about the potential losses, but did not disclose them while they were working on the original agreement.

Berman claims in the suit that Camp began a "witch hunt" against him to discredit him and eventually install himself as CEO. One goal of the campaign was to obtain Berman's shares in Cinium, the lawsuit states.

In March, the board terminated Berman as CEO and promoted Camp, Bernstein said. Camp now runs the business from Florida.

Berman is seeking to invalidate the agreement that joined Cinium and Tower, as well as $150 million in damages.

In 2010, around the time Camp started becoming more involved with Cinium, he invested $500,000 in the Berman real estate company that owns the 500 acres in Rock Hill.

Camp claims in court papers that Berman led him to believe the real estate company was in good financial shape.

Three years later, as Cinium's chief financial officer, Camp commissioned the company's audit committee to investigate Berman's finances, part of what Berman calls the "witch hunt" to oust him as CEO.

Camp claims in court papers that he discovered Berman lied about the finances of the real estate company, and that payments had not been made on the mortgage since 2009.

The foreclosure case was filed in March, about the same time Berman was ousted from Cinium.

As Berman deals with the fallout from those ventures, yet another company he once led is primed to take a major leap forward.

Empire Resorts, which Berman led a decade ago, is considered a frontrunner in New York state's competition for casino licenses.